BS-VI switch will impact 2-wheeler sales until Diwali, says Honda CEO

Minoru Kato (third from the left), president & CEO Honda Motorcycle & Scooter India, at the launch of BS-VI Activa 6G in Mumbai on Wednesday | Photo: Kamlesh D Pednekar
Honda Motorcycle and Scooter India (HMSI) does not expect a pick-up in sales of two-wheelers before Diwali. On Wednesday, it launched the latest generation, 6G, of its flagship scooter brand, the Activa. Delivery will commence next month. 

With ex-showroom prices starting Rs 63,912, it is 12-13 per cent costlier than the current model. With a 110cc, single cylinder engine, it comes with a fuel injection system, the technology that has led to higher product prices under BS-VI emission norms. 

HMSI is the country’s second-largest maker of two-wheelers and scooters are about two-third of its volumes.

Minoru Kato, its president and chief executive, explained their cautious outlook on sales pick-up to the disruption that is expected from the BS-VI implementation, madatory for all vehicles from April 1. 

“We believe the market will grow again. But, the next financial year (2020-21) will be difficult because of the price points. We expect things to improve five to six months after the new prices are accepted by customers. Sales are likely to pick up in Diwali. We hope it to be the same as last year,” said Kato.

The BS-VI norms are expected to increase the price of two-wheelers by 10-14 per cent.  It comes when the overall market has been seeing one of the longest slowdowns in two decades. HMSI sales in the first nine months of the current financial year were down 16 per cent from the same period a year before, to 3.7 million units.

Yadvinder Singh Guleria, senior vice-president for sales and marketing, said: “The change in price points in double-digit  percentage terms will have an impact because it comes amid an overall weak economic scenario. We don’t see the market reviving in the near future.” 

The 6G is Honda's third BS-VI compliant model, after the Activa 125 scooter and Shine 125 motorcycle last September. It has sold 75,000 units of these BS-VI models, claiming first-mover advantage in the two-wheeler market. 

HMSI says it has invested close to Rs 1,800 crore in 2019-20, in BS-VI technology, plant augmentation and like areas.  

Guleria says demand will start looking up in due course, given under-served public infrastructure and low two-wheeler penetration. Being a price-conscious market, any reduction in goods and services tax (28 per cent now on all two-wheelers) will definitely help, he added. 

To make its products more affordable, Honda has attractive finance schemes and been working closely with dealers, said Guleria. The overall line-up will be trimmed, with at least four to five models not upgraded to BS-VI. He declined to share details.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel